EU Nations to Seek Bonus Deal With Lawmakers in Basel III Law

The Samuel Beckett Bridge spans the River Liffey in Dublin. A spokeswoman for Ireland’s EU presidency said that it would seek to settle the key outstanding issues in the draft law at today’s meeting, and that negotiations have entered their final stretch. Photographer: Aidan Crawley/Bloomberg

Feb. 19 (Bloomberg) -- The European Union will seek to
broker a tentative compromise on banker bonus curbs today as
diplomats and lawmakers attempt to overcome 8 months of conflict
on how to apply Basel rules to the bloc’s lenders.

Ireland, which holds the EU’s rotating presidency, will
offer revised proposals on bonuses for the negotiations,
according to two EU officials, who aren’t authorized to be cited
by name. Governments have accepted that any deal on the Basel
law will need to contain binding pay rules if it is to win
European Parliament approval, said the officials.

The EU has struggled to agree on legislation to apply the
Basel banking standards, which were published in 2010 as part of
efforts to prevent any repeat of the financial crisis that
followed the collapse of Lehman Brothers Holdings Inc.

Ireland’s new proposal will amend a compromise discussed in
December by the parliament and Cyprus, the previous EU
presidency holder, the officials said. That plan would have
banned bonuses greater than twice a banker’s fixed pay. A
majority vote by shareholders representing two-thirds of the
bank’s ownership would have been needed to give a bonus larger
than annual salary.

Legislators and national officials have clashed since May
on bonuses, requirements for systemically-important banks, and
how much freedom national regulators should have to impose their
own more-stringent capital measures on lenders.

Lawmakers have insisted that the law include binding limits
on variable pay as part of a quest to reshape lenders as
utilities rather than money-making machines. The assembly’s
economic and monetary affairs committee called in May for a ban
on bonuses that top fixed pay.

U.K. Opposition

While a number of nations indicated at a prior meeting that
they could support the December plan, it was opposed by several
governments, including the U.K.

A spokeswoman for Ireland’s EU presidency said that it
would seek to settle the key outstanding issues in the draft law
at today’s meeting, and that negotiations have entered their
final stretch.

Diplomats yesterday reviewed a British counter proposal on
bonuses, the officials said. That plan would ban non-deferred
cash bonuses that are larger than fixed salary, while granting
exemptions to banks’ non-EU based subsidiaries, according to a
copy of the proposals obtained by Bloomberg News.